One of the most attractive features of a trust is that it allows you to structure your estate plan to ensure your assets are distributed according to your wishes.
Creating a trust can be a satisfying experience, knowing that you are taking steps to provide for your loved ones and favorite causes while preserving your hard-earned assets even after you are gone.
It is admirable to want to preserve your legacy, but sometimes how you go about it can end up causing more harm than good. As with any complex legal instrument, potential pitfalls can arise when drafting your estate plan and trust, even with the best intentions.
I am not a trust attorney, but as a professional trustee who has settled hundreds of trusts over more than two decades, I have seen how estate plans can lead to costly and complicated trust administrations and litigation between family members when the grantors (the creators of the trusts) try to control too much from the grave.
I am not my brother’s (or sister’s) keeper
Appointing one child as the successor trustee of a trust to distribute funds to another child can create a situation that is unfair to both children and often leads them to probate court.
The child appointed as the trustee may feel burdened with managing and distributing funds to their sibling, leading to resentment. If they make poor financial decisions, both children can be negatively impacted.
The non-trustee child may feel they are being mistreated and that their financial well-being is at the mercy of their sibling. I once witnessed an argument between two brothers, one the trustee and the other a beneficiary, that devolved into them fighting like little kids over who was mom’s favorite. They were in their fifties.
I don’t want to work for my sibling
A common saying in the charitable gift-planning community is that if you want your children to fight, leave them a foundation to operate together.
Parents often believe that leaving a foundation or business for their…
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